Research On The Applicability Of Aggressive Working Capital Term Mismatch

With the continuous advancement of reform and opening up in China,the total economic volume has increased year by year,and the development of enterprises in China has entered a new stage.In the process of enterprise development,how to make financial policy decisions has always been a key issue,which has a far-reaching impact on the further development of enterprises.The decision-making of working capital is usually an important part of enterprise financial decision-making in practice.It relates to how to coordinate the term structure of long-term and short-term projects and the stability of short-term capital chain.In classical financial management theory,there are three possibilities for the allocation of working capital:first,term matching(current assets equal to current liabilities),but it is almost impossible to appear in practice;second,conservative Mismatch(current assets greater than current liabilities),which occurs more in practice and is considered safer in theory but inefficient in the use of funds;third,radical term mismatch.(Current assets are less than current liabilities,and there are fewer cases in practice.In theory,this situation is very dangerous,but the efficiency of capital utilization is high.After China's reform and opening up,many enterprises obtain funds through radical Mismatch of working capital.This method does not need to rely on financial institutions or through administrative approval,and the financing cost is low and fast.However,there are not a few companies with radical Mismatch whose capital chain is broken.From the early Jianlibao to the recent Lexin,enterprises with broken capital chains can be described as picking up,and classical theories can be described as accurate predictions.But is the radical Mismatch of working capital a real catastrophe"?Is there an enterprise that has long adopted the mismatch of working capital term and never had the crisis of breaking the capital chain?New World,the case company studied in this paper,is just such a company.In the course of more than ten years,the operating capital of New World Company has been negative.Not only has there never been a breakdown of the capital chain,but the size and performance of the company have increased year by year.Traditional financial management theory thinks that this is a very dangerous state,even if it appears in the short term,it should be adjusted immediately to prevent the risk of breaking the capital chain,not to mention maintaining this state for a long time.Since the actual situation of the case company is contrary to the classical theory and common sense,there must be deeper reasons to make up for the differences between the two.Therefore,this paper argues that in practice,there may be some conditions for the applicability of radical Mismatch of working capital,which restrain the drawbacks of radical term mismatch.The first task of this paper is to explore these applicability conditions.This paper makes a comprehensive analysis of the New World Company by case study.It traces the origin of financial data upstream in a backward way.At the same time,it sums up what conditions exist to make the long-term radical mismatch possible in the new worldThrough the analysis of the data of New World Company for 15 consecutive years,this paper finds that New World Company has good performance in three aspects:liquidity of current assets,operating cash generation ability and sustainable financing ability.Continuous cash flow continues to enter the enterprise,fully covering the outflow of funds caused by debt repayment.The deeper reason for the strong performance of these three aspects is that the new world company's liquidity of non-quick assets is also strong,and good long-term investment reduces operating costs,at the same time,good financing environment and broad financing channels have created a good financing capacity.It is these conditions that guarantee the long-term mismatch and ease of sleep of New World companiesAfter obtaining these applicability conditions,this paper also puts forward relevant suggestions for other types of enterprises from four aspects:improving the standardization of products,prudently choosing long-term assets,partial migration to areas with good financing environment,and broadening financing channels to improve the financing capacity of enterprises.